Other regional areas of NSW, such as Albury and Dubbo, enjoy some of the cheapest petrol in the State largely due to fierce competition from independent retailers.

But Newcastle drivers routinely pay three to four cents more a litre on average than is offered at Sydney bowsers.

Yesterday prices in Sydney sat at an average $1.21 and at $1.27 at Newcastle.

NRMA economist Wal Setkiewicz said transport costs for fuel would account for about two cents of that price difference and the rest would be due to retail margins.

He said motorists would almost certainly pay more for petrol this year.

"It could rise back up to what we saw about two years ago, which was $1.70 per litre," Mr Setkiewicz said.

"How much higher it goes from here depends on the price of crude oil and of course the exchange rate, but we have seen crude oil go up by $10 to $13 a barrel from the middle of December to now.

"Last year the state of the global economy was depressed and we saw the prices fall from $1.60, $1.70 to $1.10.

"The US economy is improving and Europe is showing those signs as well so we expect higher prices for fuel.

"Right now the Australian dollar is buying about 92 US cents but if it falls again to 80 to 79 cents then that would make a big difference because we buy it in US dollars."

Mr Setkiewicz said the NRMA had consistently called for alternative fuels so motorists would not be so vulnerable to fluctuations in world oil prices.

"That's things like ethanol and electricity, which is a big one at the moment. It's about looking to those alternative fuel sources. It's about getting away from dependency on fossil fuels," he said. "And support your independent retailers."

The introduction of more independent retailers could make a difference in the Newcastle market.

"Independents set up in Orange and Dubbo and what we noticed was the average price of fuel fell and Dubbo became one of the cheaper regional centres, once those independents were established," Mr Setkiewicz said.

In Brisbane, the Royal Automobile Club of Queensland found regional motorists paid less for their petrol than those in the cities.

Spokesman Gary Fites said it was largely down to competition among service stations.